Figure 14-13 Suppose a Firm in a Competitive Industry Has the Following

question 265

Multiple Choice

Figure 14-13
Suppose a firm in a competitive industry has the following cost curves:

-Refer to Figure 14-13.If the price is P2 in the short run,what will happen in the long run?

• A) Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry.
• B) Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry.
• C) Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry.
• D) Because the price is below the firm's average variable costs, the firms will shut down.

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Definitions:

Vertebral Arteries

Arteries that supply blood to the upper part of the spinal column, neck, and lower part of the brain.

Blood Pressure

Blood pressure is the force exerted by circulating blood upon the walls of blood vessels, crucial for body function.

Force Exerted

The interaction that causes a change in the motion of an object, quantified by Newton's laws.

Arterial Blood Pressure

The pressure exerted by circulating blood upon the walls of blood vessels, specifically within arteries, crucial for maintaining blood flow through the body.